Finance Minister Nirmala Sitharaman announced a comprehensive three-pronged approach to help MSMEs grow as 'champions' in Union Budget 2026-27. As reported by The Hindu BusinessLine, Sitharaman stated that 'Recognising MSMEs as a vital engine of growth, I propose a three-pronged approach to help them grow as 'champions'. The strategy encompasses equity support through a ₹10,000 crore SME Growth Fund, increasing liquidity support through TReDS (Trade Receivables Discounting System) and bolstering professional support through 'Corporate Mitras'. Industry bodies have hailed the ₹10,000-crore SME Growth Fund proposal as a 'game-changer' for the MSME sector, with MSME Development Forum-West Bengal president Mamta Binani noting it comes at a crucial time when the sector is grappling with liquidity constraints, delayed payments and rising competitive pressures.
The Budget 2026-27 has proposed four comprehensive measures to leverage TReDS's full potential as the second pillar of the champion strategy. According to The Hindu BusinessLine, TReDS has been mandated as the transaction settlement platform for all purchases from MSMEs by CPSEs, serving as a benchmark for other corporates. The government will introduce credit guarantee support mechanism through CGTMSE for invoice discounting on TReDS platform, with GeM (government e-marketplace) to be linked with TReDS for sharing information with financiers about government purchases from MSMEs. Additionally, TReDS receivables will be introduced as asset-backed securities to help develop a secondary market, enhancing liquidity and settlement of transactions. The ₹10,000 crore SME Growth Fund is expected to complement traditional bank credit by addressing the equity gap for scalable MSMEs, with better-capitalised enterprises typically demonstrating stronger repayment capacity and lower credit risk.
The Union Budget 2026-27 has proposed the creation of a new cadre of accredited para-professionals called 'Corporate Mitras' to help micro, small and medium enterprises (MSMEs) meet regulatory and compliance requirements at affordable costs. According to The Hindu BusinessLine, the government will facilitate professional institutions such as the Institute of Chartered Accountants of India (ICAI), Institute of Company Secretaries of India (ICSI), and Institute of Cost Accountants of India (ICMAI) to design short-term, modular courses and practical tools for training Corporate Mitras. As per Forbes India, this initiative is specifically designed to help MSMEs in tier 2 and 3 cities meet compliance requirements at affordable costs. Recent industry feedback from Poonawalla Fincorp's Arvind Kapil highlighted that the focus on creating 'champion MSMEs', along with mandatory TReDS adoption, credit guarantee support and GeM integration, would improve liquidity, transparency and the speed of credit flows.
The proposal forms part of comprehensive measures announced in the Budget to strengthen the MSME ecosystem. As reported by The Hindu BusinessLine, the MSME sector accounts for 30.1% of GDP and employs 28 crore people as of July 2025, making it the second-largest contributor to India's economy. The sector is crucial for supply-chain participation, local value addition and inclusive regional growth as India's manufacturing sector becomes increasingly integrated with global markets. The ₹10,000 crore SME Growth Fund is expected to provide crucial capital to help enterprises innovate, modernise and scale, while also tariff-proofing the sector against global trade disruptions. The ₹2,000 crore top-up to the Self-Reliant India Fund will continue support to micro enterprises and maintain their access to risk capital, ensuring comprehensive coverage across all MSME segments.
The Economic Survey noted positive developments in MSME credit growth during H1FY26. As reported by The Hindu BusinessLine, TReDS has made more than ₹7 lakh crore available to MSMEs through its platform, demonstrating its significant impact on sector financing. The Survey stated that MSME credit was the main contributor to industrial credit growth, with year-on-year expansion outpacing that of large industries. The Budget 2026-27 also announced mandating TReDS as the default settlement platform for all purchases from MSMEs by Central Public Sector Enterprises (CPSEs). Sundeep Mohindru, founder of M1xchange, noted that this positioning encourages wider participation in invoice discounting and enables quicker and more affordable financing for suppliers. The government's focus on credit guarantee support on invoice discounting on TReDS and integration of GeM with TReDS is expected to deepen liquidity multifold and enhance secondary market expansion for invoices discounted.